Agricultural Material Sector Speeding up Agricultural Development

At present, Vietnam has many fertiliser producers of various economic sectors with diversified products such as inorganic fertilisers, organic fertilisers, microbiological fertilisers and special fertilisers. However, State-run producers of phosphate and nitrogenous fertilisers still hold important roles in the domestic market.

 

In recent years, the market competition of phosphate and phosphate-containing fertilisers has become more and more fierce. According to the Vietnam Chemicals Corp. (Vinachem), in 2006 it produced 910,000 tonnes of super phosphate, 445,000 tonnes of fused magnesium phosphate fertilizers, 1,569,600 tonnes of NPK fertilisers, an increase of 9-12 per cent each against 2005. These volumes basically satisfied the agricultural sector demand. In the first half of 2006, the railway sector encountered difficulties in transporting apatite ores, and Lam Thao Super Phosphate and Chemicals Company seriously lacked production inputs. However, in the second half of the year, abundant material supply enabled the company to focus on speeding up its production to realise the yearly target. Vinachem’s affiliates such as Southern Fertiliser Company, Van Dien Fuse Magnesium Phosphate Fertiliser Company and Lam Thao Super Phosphate and Chemicals Company have calculated farmer’s losses, extended fertiliser loans for farmers and continued to supply them with fertilisers to overcome the hard times and maintain agricultural production. Vinachem manufactured 170,000 tonnes of urea fertilisers, up 5 per cent over 2005. Phu My Fertilisers and Chemicals Company, an affiliate of the Vietnam Oil and Gas Group (PetroVietnam), produced 740,000 tonnes a year. This company will continue growing its capacity, increasing reserves and actively taking part in market stabilisation. To date, local factories can satisfy 40 per cent of the Vietnamese demand for nitrogenous fertilisers.

 

Together with fertiliser, the agricultural machinery production sector also had a facelift. Apart from the backbone units of the Vietnam Engine and Agricultural Machinery Corporation (VEAM), many agricultural machine installation factories of all economic sectors have increased their investment capacities and expanded production. Many kinds of soil breakers, rice harvesters, and maintenance and processing machines have been designed and manufactured to meet demand. For the time being, the Vietnam Engine and Agricultural Machinery Corporation (VEAM) accounts 30 per cent of the agricultural machinery market share. VEAM is now producing grinders, rice huskers, ball-bearings, rouleaux for rice huskers, engines and tractors, with annual production capacity for these products rising from 4 per cent to 138 per cent. Besides, the corporation also exported engines, rice huskers, rouleaux and engine parts, with a yearly increase of 1-452 per cent in 2006. The corporation continued expanding its distribution networks, sales agents and after-sale services (user instructions, maintenance, warranty, parts supply, repairing …) for customers.

 

To date, 30 provinces and cities have applied policies of providing soft loans for farmers to buy farming machines. Many localities have programmes to mechanise most farming stages. Therefore, each year tens of thousands of farming machines have reached the hands of farmers, helping quicken economic restructuring.

 

Several batches of low quality fertilisers resulting from badly controlled production, transportation or maintenance have ruined farmers’ crops and destroyed the product’s reputation. Irrational production and circulation costs have not yet been minimised. Several units failed to cooperation with market information and demonstrated unhealthy competition, resulting in unnecessary costs for distribution and sales activities.

 

The quality of agricultural machines and equipment is still low, while durability varies widely from product to product. Many machines break down suddenly during operation, and accessories are not always good. Many sales agents do not care much about user instructions, resulting in inefficient and unsafe operation of machines and equipment.

 

The competition of local agricultural machines, engines and accessories is still weak, while their prices are higher than similar products imported from China. Many local units are manufacturing counterfeit machines, smuggling foreign products and avoiding tax payments, while there are no proper preventive actions by the authorities. This causes an environment of unhealthy competition. The slowness in developing strong trademarks and the undue attention to the founding of an agricultural machine production group to increase the competitiveness of products on the market is another disadvantage of the local machine and engine production sector.